gdpt-
Feb 25, 2009, 01:42 AM
Tax friendly states
Fed up with your tax bill? Maybe you should consider moving to Alaska.
For the 17th year in a row, the far Western state earned the distinction of being America's most tax-friendly state, according to an annual report published by the Tax Foundation, a nonprofit fiscal policy research group.
Comparing the average taxpayer's total state and local tax burden for 2006 in each of the 50 states and the District of Columbia, Alaska residents had the lightest tax burden across the country.
That burden reflects what residents pay in state and local income taxes, property taxes, sales taxes, luxury taxes and fuel taxes, among others. It also factors in the portion of business taxes passed along to state residents through higher prices, lower wages or lower profits.
So what makes Alaska so tax friendly? Alaskan residents don't have to pay income or state sales tax. They even get tax refunds from the government because of the excess revenue it collects from companies extracting oil from the state. Overall, residents' state and local tax burden comes to 6.6 percent of their income.
That's a far cry from Vermont whose residents pay 14.1 percent of their income to state and local taxes.
http://eseonline.net/staff/GDPT/1.jpg
Source: Bureau of Economic Analysis, Census Bureau and Tax Foundation
Tax friendly cities
Residents of big East Coast cities like Philadelphia and New York love to complain about the cost of living in their respective towns, but their tax burden doesn't even come close to what residents of Bridgeport, Conn. have to pay.
A family of three living in Bridgeport with an annual income of $100,000 would pay 18.6 percent in major state and local taxes, based on annual data from 2005 compiled by the government of the District of Columbia.
In a separate report, the Tax Foundation estimates that 11 percent of the nation's income this year will go towards paying state and local taxes, its highest level since 1970, when the group first began tracking the figure.
http://eseonline.net/staff/GDPT/2.jpg
* Estimated burden of major taxes for a family of three making $100,000
Source: The government of the District of Columbia. Estimates based on
2005 data.
Taxing your income
As the U.S. economy continues to remain resilient, state and local governments have had no difficulty making sure their coffers remain filled. And one of the biggest drivers of revenue has been taxes on individual income.
"Due to the booming economy, people are paying more taxes," said Curtis Dubay, an economist and the author of the Tax Foundation study.
Currently all but 9 states collect income tax, according to the tax information publisher CCH Inc. In 2006, some states, like Arizona, New Mexico and Ohio, even reduced income tax rates for some or all income brackets.
Last year, those states whose tax system mimics the federal system, like Vermont and Rhode Island, experienced some of the biggest gains in revenue, said Dubay.
http://eseonline.net/staff/GDPT/3.jpg
*Taxes dividend and interest income
Source: CCH Inc.
Cha-ching! Taxes at the register
If you happen to shop in Mississippi, New Jersey, Tennessee or Rhode Island, face it - you're going to have to cough up a lot more money in sales taxes.
While a few eschew it, just about every state relies on sales tax receipts for revenue.
While sales taxes nationwide tended to hold fairly steady last year, a few states, such as Idaho and South Carolina, instituted increases by promising to lower property tax bills.
But lower state sales taxes doesn't mean you will escape paying sales tax altogether. Many local governments can, and do, charge additional sales tax.
Alaskan residents, for example, boast not having to pay state sales tax, but residents of Juneau are on the hook for a 5 percent sales tax on all their purchases. In Chicago, shoppers are required to pay an additional 2.75 percent in sales tax on top of Illinois' 6.25 percent state sales tax.
http://eseonline.net/staff/GDPT/4.jpg
Source: CCH Inc.
Relief for retirees
Sometimes getting a tax break has nothing to do with your shopping habits, income or location. In fact, half of the states in the country offer a tax break to individuals who are at, or near, retirement age.
And those benefits can vary widely, according to CCH Inc.'s John Logan.
In Iowa, for example, individuals 55 years of age or older get an income tax break. Married taxpayers filing jointly qualify for a $12,000 exemption, while single individuals can get a similar tax break for half that amount.
Illinois taxpayers, on the other hand, are exempt from paying state income taxes on any income from a pension or a 401(k), which can provide a big savings boost to those in retirement.
http://eseonline.net/staff/GDPT/5.jpg
Source: CCH Inc.
Pricey property, high taxes
If you don't count the recent downturn in the housing market, state and local governments have benefited handsomely from the run-up in home prices nationwide.
"As property values rise, so do tax collections," said Dubay of the Tax Foundation.
Homeowners in the Northeast faced some of the stiffest property taxes nationwide. In New Jersey, for example, the median property tax paid on owner-occupied housing was $5,352, according to the Tax Foundation.
http://eseonline.net/staff/GDPT/6.jpg
Source: The Tax Foundation, based on 2005 Census data
Counties that can cost you
If you happen to be a homeowner in certain areas of the South or Southwest, your property tax bill this year is probably a whole lot more manageable than if you lived, say, in New York or New Jersey.
In Apache County, Ariz. and St. Bernard Parish, Louisiana, the median property tax bill for owner-occupied housing in these two regions were less than $150 each, according to the Tax Foundation.
With property taxes on the rise, some states have stepped in to alleviate that burden on taxpayers, said Dubay.
In 2006, the state of New Jersey instituted a 1 percent state sales tax increase, from 6 percent to 7 percent. Half of the $1.2 billion that is expected to be generated is earmarked for property tax relief.
http://eseonline.net/staff/GDPT/7.jpg
Source: The Tax Foundation, based on 2005 Census data
Where does your state rank?
State and Local Tax Burdens Ranked, Highest to Lowest, Calendar Year
http://eseonline.net/staff/GDPT/8.jpg
Source: Bureau of Economic Analysis, Census Bureau and Tax Foundation
Where does your hometown rank?
Estimated Burden of Major Taxes for a Family of Three Making $100,000 Rank City (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.city.exclude.html) State (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.state.exclude.html) Income (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.income.exclude.html) Property (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.property.exclude.html) Sales (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.sales.exclude.html) Auto (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.auto.exclude.html) Amount (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.amount.exclude.html) Percent (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.percent.exclude.html) Median
http://eseonline.net/staff/GDPT/9.jpg
Source: The government of the District of Columbia. Estimates based on 2005 data.
Fed up with your tax bill? Maybe you should consider moving to Alaska.
For the 17th year in a row, the far Western state earned the distinction of being America's most tax-friendly state, according to an annual report published by the Tax Foundation, a nonprofit fiscal policy research group.
Comparing the average taxpayer's total state and local tax burden for 2006 in each of the 50 states and the District of Columbia, Alaska residents had the lightest tax burden across the country.
That burden reflects what residents pay in state and local income taxes, property taxes, sales taxes, luxury taxes and fuel taxes, among others. It also factors in the portion of business taxes passed along to state residents through higher prices, lower wages or lower profits.
So what makes Alaska so tax friendly? Alaskan residents don't have to pay income or state sales tax. They even get tax refunds from the government because of the excess revenue it collects from companies extracting oil from the state. Overall, residents' state and local tax burden comes to 6.6 percent of their income.
That's a far cry from Vermont whose residents pay 14.1 percent of their income to state and local taxes.
http://eseonline.net/staff/GDPT/1.jpg
Source: Bureau of Economic Analysis, Census Bureau and Tax Foundation
Tax friendly cities
Residents of big East Coast cities like Philadelphia and New York love to complain about the cost of living in their respective towns, but their tax burden doesn't even come close to what residents of Bridgeport, Conn. have to pay.
A family of three living in Bridgeport with an annual income of $100,000 would pay 18.6 percent in major state and local taxes, based on annual data from 2005 compiled by the government of the District of Columbia.
In a separate report, the Tax Foundation estimates that 11 percent of the nation's income this year will go towards paying state and local taxes, its highest level since 1970, when the group first began tracking the figure.
http://eseonline.net/staff/GDPT/2.jpg
* Estimated burden of major taxes for a family of three making $100,000
Source: The government of the District of Columbia. Estimates based on
2005 data.
Taxing your income
As the U.S. economy continues to remain resilient, state and local governments have had no difficulty making sure their coffers remain filled. And one of the biggest drivers of revenue has been taxes on individual income.
"Due to the booming economy, people are paying more taxes," said Curtis Dubay, an economist and the author of the Tax Foundation study.
Currently all but 9 states collect income tax, according to the tax information publisher CCH Inc. In 2006, some states, like Arizona, New Mexico and Ohio, even reduced income tax rates for some or all income brackets.
Last year, those states whose tax system mimics the federal system, like Vermont and Rhode Island, experienced some of the biggest gains in revenue, said Dubay.
http://eseonline.net/staff/GDPT/3.jpg
*Taxes dividend and interest income
Source: CCH Inc.
Cha-ching! Taxes at the register
If you happen to shop in Mississippi, New Jersey, Tennessee or Rhode Island, face it - you're going to have to cough up a lot more money in sales taxes.
While a few eschew it, just about every state relies on sales tax receipts for revenue.
While sales taxes nationwide tended to hold fairly steady last year, a few states, such as Idaho and South Carolina, instituted increases by promising to lower property tax bills.
But lower state sales taxes doesn't mean you will escape paying sales tax altogether. Many local governments can, and do, charge additional sales tax.
Alaskan residents, for example, boast not having to pay state sales tax, but residents of Juneau are on the hook for a 5 percent sales tax on all their purchases. In Chicago, shoppers are required to pay an additional 2.75 percent in sales tax on top of Illinois' 6.25 percent state sales tax.
http://eseonline.net/staff/GDPT/4.jpg
Source: CCH Inc.
Relief for retirees
Sometimes getting a tax break has nothing to do with your shopping habits, income or location. In fact, half of the states in the country offer a tax break to individuals who are at, or near, retirement age.
And those benefits can vary widely, according to CCH Inc.'s John Logan.
In Iowa, for example, individuals 55 years of age or older get an income tax break. Married taxpayers filing jointly qualify for a $12,000 exemption, while single individuals can get a similar tax break for half that amount.
Illinois taxpayers, on the other hand, are exempt from paying state income taxes on any income from a pension or a 401(k), which can provide a big savings boost to those in retirement.
http://eseonline.net/staff/GDPT/5.jpg
Source: CCH Inc.
Pricey property, high taxes
If you don't count the recent downturn in the housing market, state and local governments have benefited handsomely from the run-up in home prices nationwide.
"As property values rise, so do tax collections," said Dubay of the Tax Foundation.
Homeowners in the Northeast faced some of the stiffest property taxes nationwide. In New Jersey, for example, the median property tax paid on owner-occupied housing was $5,352, according to the Tax Foundation.
http://eseonline.net/staff/GDPT/6.jpg
Source: The Tax Foundation, based on 2005 Census data
Counties that can cost you
If you happen to be a homeowner in certain areas of the South or Southwest, your property tax bill this year is probably a whole lot more manageable than if you lived, say, in New York or New Jersey.
In Apache County, Ariz. and St. Bernard Parish, Louisiana, the median property tax bill for owner-occupied housing in these two regions were less than $150 each, according to the Tax Foundation.
With property taxes on the rise, some states have stepped in to alleviate that burden on taxpayers, said Dubay.
In 2006, the state of New Jersey instituted a 1 percent state sales tax increase, from 6 percent to 7 percent. Half of the $1.2 billion that is expected to be generated is earmarked for property tax relief.
http://eseonline.net/staff/GDPT/7.jpg
Source: The Tax Foundation, based on 2005 Census data
Where does your state rank?
State and Local Tax Burdens Ranked, Highest to Lowest, Calendar Year
http://eseonline.net/staff/GDPT/8.jpg
Source: Bureau of Economic Analysis, Census Bureau and Tax Foundation
Where does your hometown rank?
Estimated Burden of Major Taxes for a Family of Three Making $100,000 Rank City (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.city.exclude.html) State (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.state.exclude.html) Income (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.income.exclude.html) Property (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.property.exclude.html) Sales (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.sales.exclude.html) Auto (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.auto.exclude.html) Amount (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.amount.exclude.html) Percent (http://money.cnn.com/pf/features/lists/tax_friendliest_bycity2007/sort.percent.exclude.html) Median
http://eseonline.net/staff/GDPT/9.jpg
Source: The government of the District of Columbia. Estimates based on 2005 data.